ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The Company, from time to time, may make or may have made certain
forward-looking statements, whether orally or in writing, such as forecasts and
projections of the Company's future performance or statements of management's
plans and objectives. These statements are "forward-looking" statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may be contained in, among other things, SEC filings,
such as the Forms 10-K, 10-Q and 8-K, the Annual Report to Shareholders, press
releases made by the Company, the Company's Internet Web sites (including Web
sites of its subsidiaries), and oral statements made by the officers of the
Company. Except for historical information contained in these written or oral
communications, such communications contain forward-looking statements. These
include, for example, all references to 2014 or future years. New risk factors
emerge from time to time and it is not possible for the Company to predict all
such risk factors, nor can it assess the impact of all such risk factors on the
Company's business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any
forward-looking statements. Accordingly, forward-looking statements cannot be
relied upon as a guarantee of future results and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
projected in the statements, including, but not limited to the factors that are
described in Part I, Item 1A under the caption of "Risk Factors" of this
Form 10-K, which section is incorporated herein by reference. The Company is
not required, and undertakes no obligation, to revise or update forward-looking
statements or any factors that may affect actual results, whether as a result of
new information, future events, or circumstances occurring after the date of
this report.

OVERVIEW

Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is designed to provide a discussion of the Company's
financial condition, results of operations, liquidity and certain other factors
that may affect its future results from the perspective of management. The
discussion that follows is intended to provide information that will assist in
understanding the changes in the Company's consolidated financial statements
from year to year, the primary factors that accounted for those changes, and how
certain accounting principles, policies and estimates affect the Company's
consolidated financial statements. MD&A is provided as a supplement to, and
should be read in conjunction with, the consolidated financial statements and
the accompanying notes to the consolidated financial statements in Item 8 of
Part II below. MD&A is presented in the following sections:

The Business Outlook provides the Company's views on current conditions and
trends in the various markets it serves, recent Company performance and its
near-term prospects. The following information updates the quarterly filings
made by the Company throughout 2013. All forward-looking statements made herein
are qualified by the inherent risks of the Company's operations and the markets
it serves, as more fully described in the Risk Factors set out in Item 1A.

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The Company serves multiple domestic and international transportation markets
and its operations are therefore impacted by regional, national and
international economic conditions. Given its large operational presence in
Hawaii, the Company's volumes in the Hawaii trade are highly dependent on the
future results of the overall Hawaii economy, competitive activity related to
capacity and pricing, and to specific economic sub-categories including
construction. In addition, the timing of fuel surcharge collections can lead to
fluctuations in quarterly operating income performance on a comparable year over
year basis, but does not typically lead to a material annual year over year
fluctuation in operating income performance.

In the China trade, volume is driven primarily by U.S. consumer demand for
manufactured goods around key retail selling seasons while freight rates are
impacted mainly by macro supply-demand balances. As a result, this trade has
historically experienced significant volatility and seasonality in freight
rates. Currently, there is a global surplus of container vessel capacity, and a
recent market survey conducted by Alphaliner estimates that a record 1.65
million TEUs of new vessel capacity will be delivered in 2014. While excess
vessel capacity may be mitigated through vessel scrapping, deferral of new
vessel deliveries, vessel lay-ups and slow steaming, transpacific freight rates
depend primarily upon rational carrier management of industry capacity.

In the Guam trade, the competitive environment has historically impacted
financial results, and to a lesser degree, overall market volume. Currently,
the Company is the sole carrier of containerized freight from the West Coast of
the U.S. to Guam following the departure of its major competitor from the trade
lane in mid-November of 2011.

All trade lanes typically experience seasonality in volume and generally follow
a pattern of increasing volumes starting in the second quarter of each year
culminating in a peak season throughout the third quarter, with subsequent
weakening of demand thereafter in the fourth and first quarters. As a result,
earnings tend to follow a similar pattern, offset by periodic vessel dry-docking
and other episodic cost factors, which can lead to earnings variability.

Ocean Transportation: Following year over year volume growth in the first half
of 2013, Hawaii container volume contracted in the third and fourth quarters.
Despite the lull in container volume that has continued into early 2014, the
Company believes that the Hawaii economy is in a multi-year recovery and is
anticipating modest market growth in the trade in 2014. Containership capacity
is projected to increase in the second half of 2014 as a competitor is expected
to launch an additional, new vessel into the trade. Overall, the Company
anticipates a slight year over year increase in its Hawaii container volume for
2014.

In the China trade, freight rates eroded in the fourth quarter 2013, a
reflection of the ongoing vessel overcapacity in the market and the
international carriers' inability to sustain general rate increases. In 2014,
overcapacity is expected to continue, with vessel deliveries outpacing demand
growth, leading to modest freight rate erosion. However, the Company expects
its ships will remain at high utilization levels, and its service will continue
to realize a premium to market rates for its expedited service in 2014.

In Guam, the Company's container volume contracted in the fourth quarter due to
general market conditions. Muted growth is expected in Guam for 2014 and
therefore the Company expects its volume to be relatively flat compared to 2013,
assuming no new competitors enter the market.

The Company plans to maintain its core nine-ship fleet deployment throughout
2014 for the trade lanes referenced above.

Additionally, in 2013 the Company incurred start-up costs and service
reconfiguration expenses in the South Pacific trade. The Company expects
performance improvement in the trade as these costs are not expected to recur in
2014.

The Company's terminal operations joint venture, SSAT, had year over year
improvement in operating results during the fourth quarter, primarily due to new
customer activity and improved lift volume at its expanded Oakland terminal. The
Company expects modest profit at SSAT for 2014.

In addition to its Ocean Transportation service lines, Matson incurred response
costs, legal expenses and third party claims of $1.7 million and $3.0 million in
the fourth quarter and second half of 2013, respectively, in connection with the
molasses incident at Honolulu Harbor that occurred in September 2013. At this
stage in the proceedings, the Company is not able to estimate the future costs,
penalties, damages or expenses that it may incur related to the incident.

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The Company accrued $9.95 million for a proposed litigation settlement in the
case entitled United States of America, ex rel. Mario Rizzo v. Horizon Lines,
LLC et al. (the "Litigation Charge"). The full settlement of all of plaintiff's
claims was reached at a non-binding mediation and was approved by the Company's
Board of Directors on February 23, 2014. The settlement is contingent upon
approval of the United States government, and the dismissal of the case with
prejudice by the District Court.

The Company's outlook for 2014 excludes any future impact of the molasses
incident and is being provided relative to the prior year's operating income
excluding the Litigation Charge. For the full year 2014, Ocean Transportation
operating income is expected to be near or slightly above levels achieved in
2013, which was $104.3 million, excluding the Litigation Charge. Operating
income for the first quarter of 2014 is expected to be approximately one half
the prior year's level of $18.5 million due to the timing of fuel surcharge
collections, lower Hawaii volume, and lower China freight rates.

Logistics: Volume growth in Logistics' intermodal and highway businesses
extended into the fourth quarter 2013, and combined with continued cost cutting
measures, operating income margin improved to 1.9 percent of revenues. The
Company expects 2014 operating income to modestly exceed the 2013 levels of $6.0
million, driven by continued volume growth, expense control and improvements in
warehouse operations.

Interest Expense: The Company expects its interest expense in 2014 to increase
over the 2013 amount by approximately $3.5 million due primarily to the Notes
financing transaction that closed on January 28, 2014.

Income Tax Expense: Net income and earnings per share in the fourth quarter 2013
were adversely impacted by an effective tax rate of 49.3 percent as compared to
21.9 percent in the fourth quarter 2012. The rate for the fourth quarter 2013
was higher primarily due to the impact of the Litigation Charge, and a change in
timing of CCF deposits that led to a corresponding increase in tax expense. The
rate for fourth quarter 2012 was unusually low primarily due to a favorable,
non-recurring change to state tax law that required the Company re-value its
deferred tax liabilities. The Company expects its 2014 effective tax rate to be
approximately 38.5% percent.

Other: The Company expects maintenance capital expenditures for 2014 to be
approximately $40.0 million. Additionally, while the Company does not have any
scheduled contract payments in 2014 relating to its two vessels under
construction, it does expect to make additional contributions to its CCF.

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CONSOLIDATED RESULTS OF OPERATIONS

The following analysis of the financial condition and results of operations of
Matson should be read in conjunction with the consolidated financial statements
in Item 8 of Part II below.

Consolidated Operating Revenue for the year ended December 31, 2013 increased
$77.2 million, or 4.9 percent, compared to the prior year. This increase was
due to $39.6 million and $37.6 million higher revenues for ocean transportation
and logistics, respectively. The reasons for the operating revenue changes are
described below, by business segment, in the Analysis of Operating Revenue and
Income by Segment.

Operating Costs and Expenses for the year ended December 31, 2013 increased
$73.6 million, or 5.0 percent, compared to the prior year. The increase was due
to increases of $41.9 million and $31.7 million in costs for ocean
transportation and logistics, respectively. The reasons for the operating
expense changes are described below, by business segment, in the Analysis of
Operating Revenue and Income by Segment.

Income Tax Expense during the year ended December 31, 2013 was $32.2 million, or
37.5 percent of income from continuing operations before income tax as compared
to $33.0 million, or 38.8 percent, in the prior year. The change in tax rate
percent is due principally to a tax benefit in 2013 from the re-measurement of
uncertain tax positions and a non-recurring tax increase in the prior year from
non-deductible charges related to the Separation.

Loss from Discontinued Operations was $6.1 million for the year ended
December 31, 2012 related to the Separation and the shutdown of the Company's
second China Long Beach Express service ("CLX2") operations. There were no
discontinued operations during 2013.

Consolidated Operating Revenue for the year ended December 31, 2012 increased
$97.4 million, or 6.7 percent, compared to the prior year. This increase was
due to $113.6 million in higher revenue for ocean transportation, partially
offset by $16.2 million in lower revenue from logistics. The reasons for the
operating revenue changes are described below, by business segment, in the
Analysis of Operating Revenue and Income by Segment.

Operating Costs and Expenses for the year ended December 31, 2012 increased
$79.3 million, or 5.7 percent, compared to the prior year. The increase was due
to a $90.7 million increase in costs for the ocean transportation segment, which
is inclusive of $8.6 million in Separation costs, partially offset by a
reduction of cost in logistics of $11.4 million. The reasons for the operating
expense changes are described below, by business segment, in the Analysis of
Operating Revenue and Income by Segment.

Income Tax Expense during the year ended December 31, 2012 was $33.0 million, or
38.8 percent of income from continuing operations before income tax as compared
to $25.1 million, or 35.4 percent, in 2011. The change in the tax rate
percentage is due principally to certain non-recurring and non-deductible
Separation related transaction costs and the re-measurement of uncertain tax
positions in 2012 as required as part of the Separation tax accounting
treatment.

Loss from Discontinued Operations during the year ended December 31, 2012
decreased $5.5 million compared to prior year. Due to the completion of the
Separation on June 29, 2012, Matson has restated the operations for the six and
twelve months ended June 30, 2012 and December 31, 2011, respectively, as
discontinued operations from A&B. The loss from discontinued operations, net of
tax, decreased primarily due to the reduction in losses related to the shutdown
of CLX2 offset by the increase in the net loss related to A&B and the
recognition of additional tax expense related to the Separation.

ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT

Additional detailed information related to the operations and financial
performance of the Company's Reportable Segments is included in Part II Item 6
and Note 15 to the consolidated financial statements in Item 8 of Part II
below. The following information should be read in relation to the information
contained in those sections.

(1) Approximate container volumes included for the period are based on the
voyage departure date, but revenue and operating income are adjusted to reflect
the percentage of revenue and operating income earned during the reporting
period for voyages that straddle the beginning or end of each reporting period.

(2) In January 2013, the Company purchased the assets of Reef Shipping
Limited. Accordingly, given new route configurations in the South Pacific
service, the Company reclassified 2012 volume related to Yap and Palau from the
Guam containers total to the Micronesia/South Pacific containers total.

Ocean Transportation revenue increased $39.6 million, or 3.3 percent, during the
year ended December 31, 2013 compared to the prior year. The increase was
primarily due to new volume associated with the Company's Micronesia/South
Pacific service and improved freight rates and favorable cargo mix changes in
Hawaii, partially offset by lower fuel surcharges resulting from lower fuel
prices.

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During the year ended December 31, 2013, Hawaii container and automobile volume
increased 0.9 percent and 3.4 percent, respectively, due to modest market
growth; China volume was 2.2 percent higher primarily the result of an
additional sailing in 2013; Guam volume was slightly lower due to general market
conditions; and Micronesia/South Pacific volume increased due to the acquisition
of the assets of Reef Shipping Limited, a South Pacific ocean freight carrier
based in Auckland, New Zealand, early in the year.

Ocean Transportation operating income decreased $2.3 million, or 2.4 percent,
during the year ended December 31, 2013. The decrease in operating income was
principally due to the Litigation Charge of $9.95 million, start-up costs and
service reconfiguration expenses in the South Pacific trade, higher general and
administrative expenses, and other non-recurring unfavorable items. In
addition, the Company incurred $3.0 million in response costs, legal expenses
and third party claims related to the molasses released into Honolulu Harbor.
The decrease in operating income was partially offset by freight rate and cargo
mix improvements in Hawaii, lower vessel expenses from the full year deployment
of a nine-ship fleet, lower outside transportation costs due to barge
dry-dockings in the prior year, and the absence of Separation costs.

Losses attributable to the Company's SSAT Terminal Joint Venture investment were
$2.0 million during the year ended December 31, 2013, compared to an income
contribution of $3.2 million in the prior year. The loss reflected past
customer losses that resulted in lower lift volume and higher than expected
transition costs related to the expansion of its terminal operations in Oakland,
partially offset by new customers and volumes at the expanded Oakland terminal
in the fourth quarter 2013.

(1) The Company incurred additional costs related to the shutdown of CLX2
that did not meet the criteria to be classified as discontinued operations of
$7.1 million and therefore reduced operating income for the year ended
December 31, 2011.

(2) Approximate container volumes included for the period are based on the
voyage departure date, but revenue and operating income are adjusted to reflect
the percentage of revenue and operating income earned during the reporting
period for voyages that straddle the beginning or end of each reporting period.

(3) In January 2013, the Company purchased the assets of Reef Shipping
Limited. Accordingly, given new route configurations in the South Pacific
service, the Company reclassified 2012 and 2011 volume related to Yap and Palau
from the Guam containers total to the Micronesia containers total.

Ocean transportation revenue increased $113.6 million, or 10.6 percent, in the
year ended December 31, 2012 compared with the prior year. The increase was due
principally to significantly higher volume in the Guam service that resulted
from the exit of a major competitor in that trade in late 2011, an increase in
China freight rates and increased fuel surcharges resulting from higher fuel
prices, partially offset by reduced volumes in the Hawaii service.

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Container and automobile volume decreased in the Hawaii service in the year
ended December 31, 2012 compared with the prior year: Hawaii container volume
decreased 2.0 percent due to market weakness, competitive pressures, and a
modest market contraction resulting from direct foreign sourcing of cargo;
Hawaii automobile volume decreased 2.7 percent due primarily to the timing of
automobile rental fleet replacement. Container volume in the China and Guam
services increased during the year ended December 31, 2012 as compared to the
year ended December 31, 2011: China container volume increased 1.7 percent due
to increased demand and a shift in direct foreign sourcing of cargo destined to
Hawaii; Guam volume was substantially higher, increasing 77.5 percent in the
year due to gains related to the departure of a major competitor from the trade
in mid-November 2011.

Ocean transportation operating income increased $22.9 million, or 31.1 percent,
in the year ended December 31, 2012 compared with the prior year. The increase
in operating income was principally due to higher volume in the Guam service and
increased freight rates and volume in the China service, partially offset by
decreased volume in the Hawaii service, increased costs related to vessel and
barge dry-docking, and higher outside transportation costs. The Company also
incurred higher terminal handling costs due primarily to increased wharfage and
container handling rates, higher general and administrative expenses, including
Separation costs, and higher vessel expenses.

The Company's SSAT joint venture contributed $3.2 million to operating income
during the year ended December 31, 2012 compared with $8.6 million contributed
in the prior year. The decline was primarily due to the loss of volume from
several major customers.

Logistics revenue for the year ended December 31, 2013, increased $37.6 million,
or 10.2 percent, compared to the prior year. This increase was the result of
higher intermodal and highway volume.

Logistics operating income for the year ended December 31, 2013, increased by
$5.9 million compared to the prior year. The increase was primarily due to the
absence of a $3.9 million charge taken in 2012 related to intangible asset
impairment and a warehouse lease restructuring charge. In addition, Logistics
operating income in 2013 benefited from lower general and administrative
expenses and higher intermodal volume than in 2012.